To insist on 'rounded' characters is both to misunderstand the nature of fiction, he implies (fiction characters can never in fact be rounded, since they're not real!), and to require from all fiction the characteristics of only one kind of fiction (E M Forster, for instance, claimed that short stories could not provided rounded characters, by which he meant, presumably, psychologically realistic ones).
Different types of fiction employ different ways of making characters emotionally significant to us, not all of them detailed or lengthy. Wood says:
I think novels tend to fail not when the characters are not vivid or not "deep" enough, but when the novel in question has failed to teach us how to adapt to its conventions, has failed to manage a specific hunger for its own characters, its own reality level. In such cases our appetite is quickly disappointed, and surges wildly in excess of what we are provided, and we tend to blame the author, unfairly, for not giving us enough - the characters, we complain, are not alive or round or free enough.Personally, talk of 'creating characters' in writing handbooks - as if they're things to be created, somehow consciously, in their own right, and according to rules, perhaps - always makes me feel uneasy, and dreary. For we writers know, don't we, that even when we base them on real people, even when we sometimes feel that they are 'speaking to us' as we write, and even though they often surprise us, we know, don't we, that they're constructs, elements not only of our own psyches, one one aspect only of the whole construct which is a novel or story.